Technicolor is off to see the lawyers, somewhere over the rainbow

The outfit which put colour in Judy Garland’s cheeks is taking on the technology industry, claiming that smartphones are packed with its ideas.

Technicolor, an unprofitable French company that invented the process for colour movies used in The Wizard of Oz and countless other classics, is using its 40,000 video, audio and optics patents to turn its fortunes around by becoming a patent troll.

Bloomberg said that the outfit has 220 people dissecting every new smartphone and tablet from industry goliaths such as Apple, Samsung Electronics and HTC for patent infringements.

Beatrix de Russe, a lawyer and executive vice-president of intellectual property at Technicolor said that it was sending manufacturers shedloads of files with photos of the guts of their products, pointing to where they’ve been using the company’s technology without paying for it.

Technicolor, which made the first colour movie 90 years ago, holds key patents in digital audio and video and sees smartphones as gold mine for lawsuits and licensing talks.

Patent licensing is fast becoming the company’s most profitable business, according to Bloomberg.

The licensing division had a 76 percent operating profit margin last year, helped by 1,200 contracts with television, computer and handset makers.

However, the rest of the company had not done so well and had been switching from outdated film processing to digital techniques and software for movie-making.

The Paris-based company has refinanced its debt, sold assets in declining movie-equipment units, closed factories and cut jobs during the past two years.

For 2011, it posted a net loss of €323 million on sales of €3.5 billion, its fifth consecutive annual loss.

What is alarming is how many other companies which might have gone under will re-invent themselves as patent trolls and keep the courts busy.